Family businesses’ personal philanthropy is crucial to rebuilding India

 

Deval Sanghavi

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Despite progress over the last decade, many vulnerable groups continue to be trapped in the clutches of poverty, hunger, and inequality – and what steps forward were taken over recent years were in many countries paused, if not reversed, by the pandemic.

In India, the philanthropic community, and in particular the growing number of family business owners engaging in philanthropy, are responding to the need by stepping up with intent and responsibility to champion social change.

Family businesses have been an integral part of the socio-economic fabric of the Indian economy. Keeping business ownership within a family is deeply rooted in our culture. According to a report by Credit Suisse, India has the third-highest number of family-owned businesses. 85 per cent of Indian companies are owned by families and contribute almost 70 per cent to the GDP. Having stood the test of time, family businesses need to continue playing a significant role in nation-building towards India@100.

Engaging in personal philanthropy

Family businesses can play a critical role in India’s development journey by engaging in personal philanthropy over and above corporate giving. Personal giving offers flexibility that CSR giving does not. CSR is often limited to the strategic priorities of the corporate, tied to profits, and operates in a highly sensitive regulatory environment. According to the India Philanthropy Report 2022 published by Bain and Company and Dasra, family giving is expected to grow at a robust 26 per cent CAGR from FY21-26. Through personal giving, families have the potential to give flexible funding to non-profits and provide risk capital for innovation and research in underfunded areas and for solutions that have a long-term impact.

Here’s how you can begin your personal giving journey-

  1. Understand the sector: To make informed decisions about your giving, an understanding of specific sectors, thematic areas, and stakeholders is crucial. Through reading high-quality, actionable research, one can begin to understand the complex ground realities and identify causes they are best equipped to contribute to. Some of the avenues to read research are: Centre of Social Impact and Philanthropy, Centre of Philanthropy for Social Justice, India Philanthropy Report 2022 among others.
  2. Find NGOs: There is a growing need to create shockproof and resilient grassroots nonprofits. Given their close proximity to the communities, they are best placed to enable last-mile support. It is imperative for us as a country to strengthen the capabilities of these NGOs so they can work to meet the ever-changing needs of the communities they serve. Start by setting aside some capital to support the work and efforts of 5-7 such NGOs which can be found on platforms such as Give, GuideStar India , and Rebuild India Fund among others.
  3. Join peer networks: Being a part of a network of like-minded individuals creates a sense of community so one can leverage others’ learning experiences. Leading philanthropists in India and Dasra have come together to launch GivingPi – India’s first and exclusive family philanthropy network. The network is committed to creating a vibrant community of family givers by supporting them on their giving journey, nurturing collaboration, and growing family philanthropy, for a developed India. It will provide philanthropy-focused offerings such as connections to credible NGOs and trusted philanthropy advisors, peer networking, theme-based learning, and collaborative funding opportunities while also mainstreaming the narrative around family philanthropy in India. Another example is Social Venture Partners, a philanthropic network, that brings together donors, nonprofits, and social enterprises to create a greater impact. Such networks provide opportunities to share one’s own stories and challenges and engage in dialogues which goes a long way in shaping and accelerating one’s own giving journey.
  4. Engage your family: Giving as a family can be a wonderful means to create a family culture of generosity, public service, and passing down values from one generation to the next. It can serve as a way for the family to come together for a shared purpose.

CSR has created pathways for greater giving

Changes in the corporate regulatory environment with companies mandated to contribute 2 per cent of their net profits have opened the gateway for them to be more socially responsible. A study by the Indian School of Business in 2018 concluded that family firms were in fact more compliant with CSR norms than non-family firms, owing to their focus on institutionalizing enduring values across generations. The 2021 PwC global survey of family business leaders identified that 64 per cent of respondents considered leaving behind a positive legacy as one of the most important personal objectives as opposed to 60 per cent in 2018.

Family firms have been setting a strong example in corporate philanthropy. For example, DSP Investment Managers has taken a strategic pivot to invest its CSR funds toward long-term and sustainable programs through a 5-year education strategy. Their grants of nearly 65 lakhs to grassroots non-profit organizations have been truly catalytic to impact the lives of 4.5 lakh students, 12000 teachers, 300 system leaders, and 1000 tribal schools in the state of Maharashtra by 2025. Additionally, this funding helped create community centres that support 300 women domestic workers and 400 adolescent girls and boys in Delhi and Gurgaon.

Having said that, upholding social responsibility was a mindset within Indian families long before the CSR law was even a reality. Godrej marked a decade of its grand vision of ‘good and green’ in 2021, aimed at going beyond business with a focus on building a more inclusive and greener India. Having emphasized on making products from waste material, they have responsibly recycled more than 350,000 metric tonnes of waste and 4.15 million kilolitres of water – upholding their commitment to sustainable and inclusive growth. Cipla is another such example. With a patient-centred and community-focused approach, Cipla became one of the first few Indian companies that voluntarily reported their CSR spending. It set up a palliative care centre in 1997, way before CSR was a mandate. In FY 21-22, its efforts in palliative care have impacted 16,500+ patients. It continues to invest in the domains of health, education, skilling, and disaster response. 

Personal philanthropy, beyond CSR

Not only have families engaged in giving before the CSR mandate, but many families also continue to go above and beyond by engaging in personal philanthropy to uplift the marginalized communities. For them, the two per cent CSR mandate is a starting point, but their commitment to nation-building is far greater.

According to the EdelGive Hurun India Philanthropy List 2022, Shiv Nadar and his family’s personal giving has been the highest in India at INR 1161 crore. Whereas HCL Technologies’ CSR arm, HCL foundation, reported CSR spend of INR 216 crore in FY22. Azim Premji and his family’s giving is another example. Wipro’s CSR contributions for FY22 stood at INR 221.6 crore, whereas Premji’s personal giving was higher at INR 484 crore.

The Forbes Marshall Foundation has initiated several programs for underprivileged women and children from neighbouring communities across health, education, and women’s empowerment. Moving beyond CSR, Rati Forbes and her daughter Riah Forbes’ personal philanthropic journey has focused on championing the causes of the most underserved communities. Their philanthropy focuses on historically, socially, and economically marginalized groups like children with disabilities, Musahars, Devdasi communities, Nomadic and Denotified Tribes, women survivors, and manual scavengers. In the past financial year, they have already provided flexible grants to 10+ community-based NGOs working across the country.

The commitment of families toward nation-building beyond CSR is apparent outside India as well. While Microsoft invested $571M to date, to accelerate its carbon, water, waste, and ecosystem improvement goals, Bill and Melinda Gates’ personal philanthropy has been far greater. The Bill and Melinda Gates Foundation, the second-largest charitable foundation has given over $60 billion to eradicating diseases and poverty reduction around the world.

By unleashing their giving potential, Indian family businesses can create a lasting impact on those who are most vulnerable. They must come together with a shared purpose of advancing India’s growth story, freeing the country from suffering, and releasing a movement of hope and giving that enables a billion Indians to thrive with dignity and equity.

Deval Sanghavi is Co-Founder and Partner at Dasra.


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